Municipal workers had already begun cleaning the streets in the raid's aftermath, the mayor said.

But Kamal Sheikh, the district governor of Nablus, said he feared the army had merely suspended the operation and that it would soon resume.

Soldiers continue to occupy some of the buildings in the city, Al Jazeera's correspondent said.

So far, Al Jazeera reports quoting a Palestinian source, Israeli forces have failed to arrest any of the "wanted" activists of al-Aqsa Martyrs Brigades.

One Palestinian, a 42-year-old man, was killed in the operation.

The Israeli army said he was killed on Monday when troops fired at figures moving on the roof of a building where they had seen armed men and where they later found a weapon.

Palestinians said he was unarmed and was shot from a passing jeep.

'Human shield'

On Sunday, a small group of nervous Israeli soldiers forced a Palestinian youth to lead them into a home. The soldiers then took him, along with several young Palestinian men, into a military vehicle.

Israel's supreme court in 2005 had banned the practice of using Palestinian civilians as 'human shields' to search homes for explosives or fighters in advance of soldiers.

Troops in about 80 jeeps, armoured vehicles and bulldozers raided the Old City[AFP]

The Israeli army said the Nablus raid was necessary because most of the suicide bombers trying to enter Israel from the West Bank come from the city.

The army also said troops arrested five wanted Palestinians and uncovered workshops used to manufacture explosive devices and bomb belts, as well as a studio where suicide bombers recorded their farewell statements.

But Saeb Erekat, the Palestinian negotiator, said the offensive would "undermine the efforts" by Mahmoud Abbas, the Palestinian president, to maintain a ceasefire with Israel.

Ismail Haniya, the prime minister of the Hamas-run Palestinian government, condemned what he called "the criminal Israeli assault".

Settler killed

Elsewhere in the West Bank, Israeli forces on Monday arrested two Palestinians they said were suspected of killing a Jewish settler.

A Jewish settler was found stabbed to death in his vehicle near Hebron on Sunday [AFP]

The Shin Bet Security Service released photographs of the two 18-year-olds to the Israeli media after their arrest.

Israel Radio said they were taken into custody after telling people in the village they had killed an Israeli.

Israeli security forces found Erez Levanon's body on Sunday in a vehicle on a West Bank road near the city of Hebron.

In a statement issued in the Gaza Strip, Islamic Jihad claimed it had carried out the killing in revenge for it called mistreatment of Palestinians by settlers living in a heavily guarded enclave in the he